I was more than a little depressed reading Mike Semple Piggot’s recent post in Legalweek.com’s Legal Village blog:
Law Society president Marsh talked to me about his views on how the profession would look after the recession – making a strong case in favour of firms weathering the present financial conditions better than many pundits are predicting.
Marsh, who has been through three recessions and says that he saw little difference between them, believes both City and high street firms are better positioned than in the past because of improved management and greater internal resources.
I am sure that Paul Marsh would like us all to be uplifted, and there is always the risk of talking things too far down: but his view is not quite how others see it (including me, and I reckon that I have seen as many recessions as he has). Admittedly it may be dangerous to think that because it is happening in the US it will happen here, but see Bruce MacEwen’s latest post The Human Toll in Adam Smith, Esq. In particular,
And it would be folly to predict anything other than that it will get worse before it gets better.
And just in case you didn’t believe me in my last post about things getting worse, read the FT report following Mervyn King’s warning today, that
the UK economy was in deep recession and that the risks to economic growth lay “heavily to the downside”.
Gordon Brown quoted in The Telegraph this morning
“We are leading the world in sweeping away the old short term bonus culture of the past and replacing it with a determination that there are no rewards for failure and rewards only for long-term success” and
“In the future there must be rewards for success – but long-term sustainable success and not just short-term gains”
I am not sure where this rule about rewards for long-term sustainable success will leave Gordon Brown come the next election. Although he may not be wholly to blame for the current state of UK PLC, his years at the Treasury and the policies he then promoted have played a significant part.
There is a measure of political self-delusion in trying to claim that we are better placed than others to weather this recession/depression; similarly in the argument that he is merely the victim of circumstance.
If he is pinning his hopes on the electorate believing him, then today’s Times/Populus poll will be a great disappointment.
You cannot do better than read Samuel Brittan in today’s FT, The problem with all this economic doom and gloom.
The most alarming feature at present is the fatalistic public mood. The slump is being discussed as if it were a natural catastrophe like the arrival of the comet that destroyed the dinosaurs. All the popular talk is of retrenchment, cutting down and spartan savings of all kinds. It should not take a genius to appreciate that such activities can only make the situation worse and aggravate a downward vicious spiral. I would be the last to argue that people should spend recklessly for patriotic reasons, but nor should they stint themselves.
Brittan reminds us that he wrote almost a year ago of the of the need to ‘buck up’, of avoiding talking ourselves into another depression. What was true then, is more so now.
Chasing debt and effective cash flow management are critical in a downturn (see Rob Millard’s Heads of Pigs and Golden Rules, posted yesterday) but also consider:
- client take on: not following the necessary risk management procedures when taking on new clients may be disastrous. I hope you aren’t replying to the email scams from the widows and orphans of third world dictators, but the next worst thing is not doing the appropriate DD on the new client.
- working outside your competence: it is all too easy to say you will do something that you simply don’t have the expertise to do. At the best of times clients are not impressed by your learning on the job; taking on work because you cannot face turning it away (all too easy when you’re sitting at your desk trying to look busy) is a surefire recipe for an indemnity claim.
- soft terms: winning work sometimes requires you to take a view on fees ~ discounting for the future. It is also important to be realistic over cost. But agreeing terms that devalues the work not only sets a precedent that in better times it may be hard not to follow but it also demoralises the team.
- Partner ego: in many firms power and politics is intrinsically linked to partner performance. Maintaining this in a downturn may mean that work is kept, not delegated. It all comes back to Spending time wisely.